Demand for senior housing and new data centres set to rise

Image credit: Khakimullin Aleksandr/Shutterstock

An ageing population, and the inexorable expansion of digital technology, are set to fuel increasing demand for new buildings to accommodate both people and computing infrastructure, suggests a new report.

In a detailed analysis published by real estate services firm, Cushman & Wakefield, it is claimed that housing for older people, data centres, and life sciences top the UK sectors that require an increase in commercial and residential property stock by 2040.

The Shape of Real Estate report seeks to quantify the spatial requirements for these fastest-growing sectors, the firm says; showing that stock needed will be driven by behavioural and economic change brought about by technological advances, demographic shifts, and the evolving standards and requirements of the built environment.

Daryl Perry, head of UK research and insight at Cushman & Wakefield, said: “Understanding demand-led variables helps to identify the imbalances in the UK real estate portfolio and in turn shape future cities. The largest requirements for additional stock are projected to be focused towards housing, and caring, for an ageing population. However, we expect the logistics and industrial and living sectors to attract the most investment through to 2040, and in turn increase the competition for space.

“Looking ahead to see the trajectory of real estate in the years, and indeed decades, to come has never been more important. Yet there are significant external factors that will weigh on the potential for real estate to respond, including the ongoing impact of inflation, government policy and evolving environmental and business standards.

“The real estate market is constantly responding to how we use space, and as the number of properties increases, alongside growing capital investment, the rate of change will only continue to gain pace.”

With the number of over-65s expected to increase by nearly four million to nearly 17 million between today and 2040, seniors housing requires the greatest growth in percentage terms, in stock to meet demand. According to the report, at an increase of 171.3% on existing levels of seniors housing the total change is substantially more, proportionally, than all other sectors.

Data demands

Meanwhile, the explosion in demand for data storage – driven by generative AI, subscriptions to cloud-stored content services, and e-commerce – has propelled data centres to second on the same metric with a near-doubling of existing stock.

Life Sciences has the third largest required increase, with growing public interest in the health, green, and pharmaceutical industries, alongside the continuing advancement of scientific progress.

Despite projections of a more subdued rate of economic and population growth in the UK than in the recent past (2005 to 2023), the requirements for real estate continue to be significant, the firm says. It sets out projections for annual increases in the requirements for the life sciences, hotels, and logistics and industrial sectors ranging between 2.6% and 0.9%.

Similarly, housing demand is not expected to ease materially through to 2040 thanks to slowing population growth being offset by people living longer, rising numbers of single-person households and migration.

Owner-occupied homes are expected to see the lowest level of growth as affordability remains “challenging” amid the supply-demand imbalance, while the private rented sector is projected to grow its share of tenure significantly, reflected in a projected 43.1% required increase in stock.

David Haynes, head of specialist markets at Cushman & Wakefield, said: “Despite increased awareness of the UK’s ageing population and the burden this will place on the UK’s public services, the delivery of seniors housing has barely increased.

“As our research shows, it is essential that delivery increases substantially if older people are to live healthier and happier lives for longer. Increasing the number of age-appropriate homes will help relieve some of the pressure an already struggling health, social care and housing system is set to face, as well as releasing non-age restricted housing stock helping ease the supply demand imbalance.

“Our report estimates a further four million dwellings will be required by 2040 and even that rate of construction will just maintain historic trends rather than address the chronic shortage of homes.”

Image credit: Khakimullin Aleksandr/Shutterstock


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